Siemens Agrees To Acquire Efficient Networks

In a bid to get into the local broadband data equipment business, a division of German networking hardware manufacturer Siemens AG has agreed to buy digital subscriber line equipment vendor Efficient Networks Inc. for $1.5 billion.

The acquisition, by the Siemens Information and Communications Networks Group in Munich, also would give Siemens an opportunity to expand its U.S. equipment sales, company execs say. The Siemens unit already sells DSL access multiplexers to data and Internet service providers, and it hopes the acquisition will allow it to enter the market for customer premises equipment.

"They're buying not only the [Efficient] technology, but also the market share," since Efficient is the clear market leader in DSL customer premises equipment, says Ron Westfall, an analyst at market researcher Current Analysis. For corporate customers, the purchase could lead to lower prices since Siemens is larger and can make and distribute equipment more efficiently, Westfall says, in addition to creating more uniformity between equipment sold in the United States and Europe.

The purchase would be completed in two phases. First, Siemens will offer to pay Efficient shareholders $23.50 per share for all of their stock. Once that's been done, Siemens will buy all remaining shares of Efficient and will merge the Siemens Information and Communications Networks unit into Efficient. The companies hope to complete the deal by April.

Mark Floyd, Efficient's founder and chairman, says the acquisition makes sense because it would let both companies find larger markets for their products, it gets Siemens into the booming market for high-speed local access products, and there's no overlap between the companies' products.